Lonmin closer to Ashanti sale

A year after the election of a new business-friendly president, the government of Ghana could be close to a sale of the country's biggest company, Ashanti. The battered gold company, which controls one of the largest mines in the world, is 20 per cent owned by the Ghanaian state and 32 per cent owned by Lonmin, the British mining group that has turned its focus on platinum. A sale would produce a considerable sum for its biggest shareholder Lonmin.

Analysts have long assumed both parties would be keen to sell their stakes when the Ashanti's shares, listed on the New York Exchange as well as in Ghana, reached an acceptable level. They dipped to an all-time low of $1.50 almost a year ago, but staged a steady recovery, closing on Friday just one cent shy of $4.

"The market has certainly taken this stock up to the price levels Lonmin and the government would be looking at to divest their stakes," said a senior South African mining analyst. "If this trend takes the stock up to the $5 mark, you could be looking at a sale within a few months."

Other Johannesburg analysts believe Ashanti's financial and operational problems mean the company itself should be looking for a buyer. City analysts say the Ghanaian government and Ashanti's chief executive Sam Jonah would welcome the financial benefits of a sale. The original fall in the company's shares followed what Peter Davey of SG Securities describes as Ashanti's "disastrously structured hedge book". Ashanti has a considerable debt problem, and would benefit greatly from the financial might and operational expertise of one of the world's big players such as Barrick, Placer Dome or Anglogold.

Even with a $5 tag, $5 Ashanti would be cheap. The jewel in their crown is the massive Obuasi mine in Ghana, but they also have interests in Zimbabwe. That would make it particularly attractive to Anglogold, basing its expansion plans in Africa.

But the Ghanaian government holds the "golden share", a right to veto board decisions beyond its 20 per cent financial stake. They are said to be rethinking this.